Effect of Presidential Decree No. 69 on the Number and Age of Dependents for Income Tax Purposes

April 16, 1973 BIR RULING NO. 013-73 Effect of Presidential Decree No. 69 on the number and age of dependents for income tax purposes . Pursuant to Section 12 of Presidential Decree No. 69, the proviso of Section 23(c) of the Tax Code, as amended by the said Decree that the total number of dependents for which additional exemptions may be claimed shall not exceed four (4) dependents shall take effect and apply to income earned starting January 1, 1973, the corresponding income tax on which is payable at the time of the filing of the return on or before April 15, 1974. (BIR Ruling No. 73-005, dated March 19, 1973) Such being the case, an individual taxpayer can still claim in his 1972 income tax return, additional exemptions for all his dependent children in 1971 provided that he qualifies as "head of the family" under Section 23(b) of the same Code; and that such dependents are his legitimate, recognized natural, adopted or step children, wholly dependent upon and living with the taxpayer, not more than twenty-three (23) years of age, unmarried and not gainfully employed or incapable of self support because mentally or physically defective. Effective January 1, 1973, the maximum age of dependents qualified for addition exemption has been reduced from twenty three (23) to twenty one (21) years old, and the total number of dependents for which additional exemptions may be claimed shall not exceed four (4) dependents. (See Sec. 23(c) as amended by Presidential Decree No. 69). However, since the said proviso of Section 23(c) of the Tax Code, as amended by Presidential Decree No. 69 is of prospective application, those who have more than four qualified dependents in 1972 may continue to claim the additional exemption for the total number of such dependents for the calendar year beginning January 1, 1973, and subsequent years provided that as of the end of said calendar years such dependents meet the requirements enumerated in Section 23(c) of the Tax Code, as amended by Presidential Decree No. 69, which for ready reference and guidance is quoted hereunder as follows: "(c) Additional exemptions for dependents . The sum of one thousand for each legitimate, recognized natural, or adopted child, wholly dependent upon and living with the taxpayer if such dependents are not more than twenty one years of age, unmarried, and not gainfully employed or incapable of self support because mentally or physically defective. The additional exemption under this subsection shall be allowed only if the person making the return is the head of the family. Provided, however, That the total number of dependents for which additional exemption may be claimed shall not exceed four dependents." In the light of the foregoing, and in accordance with the withholding table prepared by the Secretary of Finance which is Revenue Regulations No. V-8, as amended by Revenue Regulations No. 1-70, corresponding adjustments in the withholding of income tax should be made by the employer on the salaries of employees, particularly on those whose number of dependent children is reduced due to the fact that one or more of such dependent children are already more than twenty-one (21) years old.